Many refer-a-friend schemes don't work as well as they could. Fact.
A few years ago Mention Me surveyed 150 UK online companies and found that about half of them had some kind of referral scheme. Yet very few of them proclaimed it a runaway success. Why is this?
Very simply it is because most refer-a-friend schemes don't invest in working through the psychology of what it will take someone to share. Online businesses are usually managed by looking at how they work as a funnel which people drop out of as they go along. For instance, 1,000 people may visit a home page. 500 will look at products. 100 will get to the cart and in the end 50 will end up buying.
Refer-a-friend may also be viewed as a funnel. The challenge is that the refer-a-friend funnel is more complicated because you have two people involved in the funnel.
1,000 people may see a referral offer. 500 of them may decide to share it with friends. Then only 200 of their friends may open the offer and then 10 friends end up buying. Because you're looking at a funnel with two people in it, in order to optimise it you quickly need to understand the psychology of sharing: What will make someone want to share with their friends? How would they like to share so that it feels natural? What will make the referred friend take up the recommendation? All of this is a real challenge. It requires thought, testing and optimisation.
Most refer-a-friend schemes are not thought through in this level of detail. Typically, the marketing team think of an offer they'd like to give to anyone who refers and then asks the development team to build a refer-a-friend scheme. The development team build it and then it's released to the public. No time is spent on thinking through the magic that is required to make your customers feel comfortable about sharing.
At Mention Me, one of the things we've developed is an AB testing capability for our clients so that the marketing team can play with the offers, language and creative until they uncover this magic.
Here are some of the things that we've seen make sharing easier for your customers:
1. An offer for their friend
Some refer-a-friend schemes just incentivise the referrer. Actually enabling someone to go to a friend and say "I'd recommend this site and I can get you a discount" is a far better message than a straight recommendation. Most people feel very uncomfortable about the prospect of profiting from a friendship. However if you can give a friend something like a discount code then you can feel like you're helping them and giving them something of value rather than profiting.
We'd also recommend testing which reward to lead with in your messaging. A common AB test we have run with brands is the "generous" vs "selfish" copy test.
"Generous offer" - give to your friends
"Selfish offer" - get something
Different brands have seen very different results when testing this type of offer.
2. A one line message to give to their friend
Sharing is easier when you have a compelling reason why your friend should use a product or service. This may be the company's unique selling point or it may be the biggest benefit that the customer perceives. Putting the right message in the customer's hands is powerful.
I once used an online currency exchange service called Currency Fair that saved me almost 2% compared to the banks. I loved it and I shared it with friends who I thought it might be relevant to with the very obvious message that it could save them 2% every time they exchange money. It was an easy message. In contrast, I was recommending a tool we were using at Mention Me. My friend who I was telling about it came back to me with, "Oh yeah, there are loads of them out there." I had no message to justify why I thought it was better than the other companies that I didn't know.
A good referral mechanism will make sure that a referring customer has something good to say about the product or service to their friends and that the message will be perceived as interesting by their friends.
3. Previews of messages to be sent
One of the biggest barriers to sharing is the fear that friends will perceive the message as spam. Friends may perceive a referral message as "spammy" if it doesn't have much relevance to them or if it looks like it's been written or sent by someone other than the sender. Anyone wanting to refer something will be aware of this, either consciously or sub-consciously. They therefore tend to verge on the paranoid about what is being sent to their friends. It is critical that they feel in control and the best way to enable this is to show them a full preview of any messages or posts that will be sent.
4. Replicating the language friends use amongst themselves
Many of us have seen something posted on a social network from one of your friends saying something like "I love product x. It's the best product ever. You have to try it." It's a message that has obviously written by someone else that has been posted by your friend (normally in return for an incentive or without them realising it.) By being so obviously written by someone else it loses almost all of the authority that comes when a friend posts something. There's a simple rule here. Friends don't sell to friends. Therefore don't ask your customers to post or send sales messages to friends. A bland line along the lines of "I've just used this site and thought it was pretty good. I can also get my friends a discount if you want to use it," will be more powerful than "I love this site. It's the best site in the world. Go use it now."
5. Enable sharing in conversations
One of the key components in referral that is often overlooked is that most recommendations don't happen online. They happen offline in conversations. The problem with many refer-a-friend schemes is that they don't account for this. You can share links all day long but when you're in a conversation recommending a company you have no way to pass on an introductory offer to your friends. At Mention Me we've got a way around this. We enable people to share using their name. Once someone has registered to be able to refer your site they can simply say, "Just go to the site and enter my name on the homepage or in the checkout to get your introductory offer." This significantly increases the liklihood of the recommendation happening in the first place and of it closing.
There's a lot more to the psychology of sharing than the few tips above (in fact we have a whole blog series about it) but hopefully these give you a flavour of the type of thinking that is required to make the magic happen and to make referral work.
If you're considering a referral programme, or already have one but need help optimising it, then get in touch to see how we can help.